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Barbie hits the skids

She's famously shaped like an hourglass, but time seems to be running out for the iconic Barbie.

The 46-year-old Mattel doll has seen her status and sales slide, has lost shelf space at major retailers and has been displaced by the edgy, hip-hop Bratz. Her woes, which reflect an ongoing struggle for old-school toy marketers, sparked a management shake-up at Mattel-where the bottom line has been impacted by her waning popularity.

Barbie's global third-quarter sales were down 18% from the previous year, and the story was even grimmer in the U.S., where the curvy blonde's sales decreased 30%. Her slump dragged down the company's overall performance as shares tumbled to their lowest point in four years. Barbie accounts for an estimated 25% of Mattel's sales.

The weak performance touched off a management shuffle, with 17-year Mattel veteran Matt Bousquette abruptly leaving the company. He was president of the division that shepherded Barbie and Hot Wheels, among other brands.

Mattel consolidated nearly all its brands and named Neil Friedman, former head of its Fisher-Price division, to run the merged units. A well-regarded toy executive under whose watch Fisher-Price launched hits such as Tickle Me Elmo, Mr. Friedman will oversee a vast portfolio of properties, excluding the popular American Girl line. Mattel declined to comment for this story.

The toy industry overall has struggled, with sales down 5.3% through the first nine months. U.S. retail sales of dolls fell 6% in that period, according to market researcher NPD Group. Analysts believe the slide will continue as more kids choose video games and digital-music players over action figures and board games.

Vulnerable

Barbie is seen as particularly vulnerable, as girls respond more to multicultural dolls such as those marketed by Bratz and American Girl. Barbie has been a staple for decades and remains a billion-dollar brand, but she hasn't kept pace. So far, attempts to update Barbie's image have failed. Mattel was caught off guard by the popularity of the doe-eyed, belly-baring Bratz, and the marketer's response, the urban-themed Flavas, never took off.

Former Mattel CEO Jill Barad built her reputation on boosting Barbie, with market share peaking at 90% among fashion dolls in 1997. Ms. Barad was ousted from the company in 2000-following a disastrous acquisition of the Learning Co., which lost Mattel some $400 million.

The next year, MGA Entertainment introduced Bratz, and Barbie went into a dive. Bratz racked up $2.5 billion in global sales of dolls and related merchandise in 2004, putting it close behind the $3 billion Barbie franchise, and Bratz sales are up about 40% so far this year.

While Mattel still has a lock on the 3- to 6-year-old girls for whom Barbie is a rite of passage, they tend to leave her behind when they hit their tween years, said Meryl Friedman Holland, a marketing consultant who used to work on Barbie's consumer products line. She said Bratz and American Girl have clearer positioning.

"There's a depth that's missing from the Barbie brand. Mattel needs to build a foundation for this age and time," Ms. Holland said. "They need to ask, `What's my story? What is Barbie's new direction for the long term?' "

Barbie's age isn't her problem, said Chris Byrne, editor of The Toy Report, who said older brands such as Care Bears and Cabbage Patch dolls have maintained strong sales. "Barbie's not going away, but she needs to be restaged or she'll continue to decline," Mr. Byrne said. "A lot more needs to happen than just a subtle change in the shade of pink."

No makeover?

Because Barbie is an icon, Mattel executives might not be inclined to radically change her for fear of alienating young girls and their gatekeeper moms. And bureaucratic processes could make it impossible to do a Barbie makeover, said Fara Warner, author of the recently released book "The Power of the Purse," which includes a chapter on the Bratz vs. Barbie battle.

"There has to be destruction in order to have re-creation," Ms. Warner said. "Is it even possible to redo Barbie within the constraints of the corporation? I'm not so sure."

The marketer has tinkered with the property over the years, adding "friends" for Barbie from around the world and trying more street fashions. "That's damaged the brand," Ms. Warner said. "She's muddled now; she doesn't have that much of an identity anymore."

Former Mattel executive Ken Markman, now CEO of KKM Global Brand Strategies, believes the Barbie doll became a commodity product as Mattel tried to broaden its appeal and strayed from Barbie's core values.

"It's not a function of saving her, it's a matter of recognizing what made her powerful to begin with and making that relevant today," he said.